Wednesday, December 21, 2011

The National Association of Realtors says it overestimated home sales by more than 14 percent since 2007 because an adjustment that the trade group makes to data it collects from multiple listing services to account for sales that take place outside of MLSs got out of whack over time.

NAR says it's fixed the problem and "rebenchmarked" statistics going back to 2007, when it said its adjustments began to diverge from previous assumptions about how many sales take place outside of MLSs.

The trade group blamed much of the problem on a decline in "for sale by owner" sales -- properties not represented by real estate brokers and therefore not listed in an MLS.

NAR said consumer survey data show FSBOs accounted for 9 percent of sales in 2010, down from 16 percent in 2000.

"In addition to a decline in FSBO transactions, more builders began marketing new properties through real estate brokers (and those sales) weren't completely filtered from the existing-home data," NAR Chief Economist Lawrence Yun said in a statement.

"Some property listings on more than one MLS, and issues related to house flipping, also contributed to the downward revisions."

After rebenchmarking 2010 data, NAR now says there were 4.19 million existing-home sales last year, down 14.6 percent from the 4.9 million sales the group previously reported. For 2007 through 2010, sales and inventory were 14.3 percent less than previously reported, the group said.

NAR said the rebenchmarking doesn't affect previously reported median home prices or months' supply of homes for sale. Previously reported month-to-month trends in housing sales were also unaffected, because sales for each month have been revised downward.

Although rebenchmarking will also be done at the state level, data reported by local MLSs and Realtor associations is still valid, because those numbers are published before they are adjusted.

The need to rebenchmark NAR's existing-home sales statistics is generating national headlines that could damage the trade group's credibility.

Anticipating NAR's revisions, the Greater Tulsa Association of Realtors in Oklahoma last week issued a press release reassuring consumers that "the newly revised national data has no impact for local homebuyers" and that "rates are (the) lowest in history and it's still a great time to buy in Tulsa."

Phoenix-based broker Jay Thompson said that so far his clients haven't voiced any concerns about NAR's need to revise its existing-home sales statistics.

"I think within the real state industry we're probably more concerned about it, and certainly more aware of it, than consumers are," Thompson said.

The MLS numbers "are good and solid," he said, and his clients put more faith in the MLS-based local market reports he provides them with rather than media reports on national sales figures.

"The mainstream media tends to blow these things out of proportion," Thompson said. "I have no evidence that buyers and sellers pay any attention to the numbers that come out of NAR. They see the headlines but it never comes up in conversation."

NAR's national statistics are important to economists, policymakers and others who make decisions based on macro-level data including national home sales.

The benchmark revisions, for example, will require the U.S. Bureau of Economic Analysis to make a small downward adjustment to its estimates of national gross domestic product (GDP). That's because the bureau relies on NAR's existing-home sales figures to estimate real estate brokers' commissions on the sale of residential structures, most recently pegged at $55.5 billion a year, down from a peak of $109.9 billion in 2005.

If that figure were adjusted downward by 14 percent, the $7 billion reduction would have only a slight effect on the U.S.'s $15 trillion GDP. Brokers would not be affected because they collect actual, rather than estimated, commissions.

NAR said that in the process of rebenchmarking, it consulted with the Federal Reserve Board, the Department of Housing and Urban Development, Freddie Mac, Fannie Mae, the Mortgage Bankers Association, the National Association of Home Builders, CoreLogic, and individual economists.

The latest, rebenchmarked data from NAR shows existing-home sales increasing by 4 percent from October to November, to a seasonally adjusted annual rate of 4.42 million homes -- a 12.2 percent increase from a year ago, when homes were selling at a pace of 3.94 million units a year.

Housing inventory was down 5.8 percent from October to 2.58 million existing homes for sale, a seven-month supply at the current sales pace. Inventories peaked at a record 4.04 million in July 2007, NAR said, citing the rebenchmarked figures.

The national median existing-home price was $164,200 in November, down 3.5 percent from a year ago.

Distressed homes, including short sales and homes repossessed by lenders, accounted for 29 percent of sales in November, down from 33 percent a year ago. NAR said 19 percent of home sales were lender-owned properties and 10 percent were short sales.

All-cash sales -- mostly to investors -- accounted for 28 percent of existing-home sales, down from 29 percent in October and 31 percent at the same time a year ago.

First-time buyers accounted for 35 percent of existing-home sales, up from 34 percent in October and 32 percent in November 2010.

Breaking down existing-home sales by category, NAR said single-family home sales were up 4.5 percent from October to a seasonally adjusted annual rate of 3.95 million, a 12.9 percent increase from a year ago. The median existing single-family home price was $164,100, down 4 percent from a year ago.

Existing condominium and co-op sales were unchanged from October, with transactions closing at a seasonally adjusted annual rate of 470,000, up 6.8 percent from a year ago. The median existing-condo price was $164,600, down 0.2 percent from a year ago.

Regionally, existing-home sales in the Northeast were up 9.8 percent from October to an annual pace of 560,000, a 7.7 percent increase from a year ago. The median price in the Northeast was $240,200, down 0.1 percent from a year ago.

Existing-home sales in the Midwest were up 4.3 percent from October, to a seasonally adjusted annual rate of 960,000, a 15.7 percent increase from a year ago. The median price in the Midwest was $133,400, down 4 percent from a year ago.

In the South, existing-home sales were up 2.4 percent from October to an annual pace of 1.74 million, a 12.3 percent increase from a year ago. The median price in the South was $143,300, down 2.1 percent from a year ago.

Existing-home sales in the West were up 3.6 percent from October to an annual level of 1.16 million, up 11.5 percent from a year ago. The median price in the West was $195,300, down 8.4 percent from a year ago.

Wednesday, December 7, 2011

by Rebecca Nemeth
Anyone who’s looked for their first home in Albany, Berkeley, El Cerrito, or Kensington (or wants to downsize into something more manageable) has noticed that we have homes in an array of sizes. While most homes here begin at 900 square feet and go up from there (typically up to about 3,000 square feet), we do have a few that are teensy. I’ve seen a few as small as 500 square feet.

Why would someone build something so small? Sure, its possible that people just had less “stuff” in 1920 than they have now, but have you noticed that even smaller “tiny houses” are getting increasingly popular now?

The historic precedent – Why Albany has some Relatively Tiny HomesIn Albany, for example, the city subdivided some lots into parcels of 3,800 or 3,300 square feet, and even as small as 2,500 square feet. Fortunately builders like Charles MacGregor took on building nice quality homes on these small scale lots in the 1920′s and 1930′s. This allowed people who were probably then “blue collar” homeowners to afford a nicely built home with details like dining room built-in cabinetry, curved archways, recessed niches, and beautiful fireplaces. The layouts follow a typical Craftsman style, with logical layouts that don’t waste space, and that integrate the kitchen, living room, and dining room into more open public spaces than Victorian homes did. These single story homes were usually 850 to 1,000 square feet, huge compared to today’s 65 (yes, 65) to 500 square foot Tiny Homes.

Urban planners and environmentalists will tell you, small is beautiful. Here are a few reasons why.

Smaller homes make it easier to have strong, interconnected communities. Smaller homes can be built closer together, on smaller lots (such as the semi-urban lots that are common in Albany and Berkeley), making it easier to support something like Albany and Berkeley’s Solano Avenue, an old school type of Main Street with locally-owned businesses, and an array of city parks. You’ll find many neighborhood shopping districts and parks like these throughout the 1920′s era parts of the East Bay.

Smaller homes make it easier to have good public transit. Because more people can live closer together, the community can support an excellent, robust public transit network with features like our BART trains and AC Transit buses.

Smaller homes are better for the environment. From an energy conservation standpoint, smaller homes use fewer resources to build, require less energy to heat and cool, and the owners will be using furniture and items that serve double or even triple purpose (so they’re buying less furniture, etc.).

Smaller homes are easier and more affordable to build yourself (vs. a larger new home).Plans for many smaller homes are readily available online, especially if you’re interested in the micro-size Tiny Homes that have become more popular in recent years. Cheap building plans, designs with an eye to energy efficiency and easy of use, fewer materials needed, and fewer “man” hours needed to build a home = a less expensive home.

Smaller homes more affordable to own. A smaller home = a smaller purchase price. That means you may be able to pay all cash and not have a mortgage, or have a very small mortgage. A smaller purchase price = smaller property taxes. And smaller homes also = smaller utility bills. Every heating and lighting dollar can go into usable space instead of that huge atrium or “living room” people don’t actually live in.

Smaller homes may be the best fit for the available empty lots and suit what city building codes will allow. In our area, any lot that could be built on in conventional ways has been built on. But you may find some smaller lots, or some that would accommodate a smaller home in part of the lot. Also, most cities limit the amount of living space you’re allowed to have relative to the size of a lot (for example, in Albany that ratio is 55% of the lot size). Many cities also have set-back requirements, which state how far from a house must be from the lot line or the neighbor’s house.

For more information check out these articles and blogs on Tiny Homes. Many include plans for building your own tiny house.